Atwood v. Rhode Island Hospital Trust Co., 2342

• Decision Date: 13 July 1929
• Docket Number: 2343.,No. 2342,2342
• Citation: 34 F.2d 18
• Parties: ATWOOD et al. v. RHODE ISLAND HOSPITAL TRUST CO. et al. RHODE ISLAND HOSPITAL TRUST CO. v. ATWOOD et al.
• Court: U.S. Court of Appeals — First Circuit

34 F.2d 18 (1929)

ATWOOD et al. v. RHODE ISLAND HOSPITAL TRUST CO. et al.^*

RHODE ISLAND HOSPITAL TRUST CO. v. ATWOOD et al.

Nos. 2342, 2343.

Circuit Court of Appeals, First Circuit.

July 13, 1929.

Lyman K. Clark, of Boston, Mass., and William E. Carnochan, of New York City (Theodore C. Richards, of New York City, and William R. Harvey, of Newport, R. I., on the brief), for Atwood and Boal.

James C. Collins, of Providence, R. I. (William R. Tillinghast and Harold B. Tanner, both of Providence, R. I., on the brief), for Rhode Island Hospital Trust Co.

Robert Thorne, of New York City (Eliot G. Parkhurst and Edwards & Angell, all of Providence, R. I., on the brief), for Metropolitan Museum of Art.

Richard E. Lyman and Harry P. Cross, both of Providence, R. I., and Dallas S. Townsend, of New York City, for Barry.

Before BINGHAM and ANDERSON, Circuit Judges, and MORRIS, District Judge.

MORRIS, District Judge.

This is an appeal from the District Court of Rhode Island dismissing a supplemental bill of complaint of Kate Atwood et al., brought, as is alleged, to protect and effectuate a former decree of this court and to restrain the Rhode Island Hospital Trust Company and others from continuing certain proceedings alleged to be in derogation of the complainants' rights under a decree entered in accordance with an order of this court October 14, 1921, in the case of Atwood et al. v. Rhode Island Hospital Trust Co. et al., reported 275 F. 513.

The controversy arises over the ninth clause in the will of Theodore M. Davis of Newport, R. I., who died February 23, 1915.

On the fifth day of April, 1915, the probate court of the city of Newport, R. I., duly admitted to probate a paper purporting to be the will of Theodore M. Davis dated August 14, 1911, and a codicil thereto dated October 4, 1911, as together constituting the last will and testament of Theodore M. Davis, deceased.

On the same date of the execution of the will, August 14, 1911, Davis executed a trust agreement in which he made the Rhode Island Hospital Trust Company trustee and delivered to it a large amount of property to be held and managed in accordance with the terms of the trust instrument. Under the terms of the trust the trustee was to pay the net income derived therefrom to Mr. Davis during his life and upon his decease to convert a sufficient amount of the trust estate into cash for the purpose of paying certain designated amounts to certain beneficiaries named in the deed of trust. The remainder of the trust estate not required for payment of the sums above mentioned was to be held in trust to pay the net income to his wife Annie B. Davis and to Emma B. Andrews. Upon the decease of the survivor the trustee was directed to divide the principal of the remaining trust estate into equal parts and pay over said parts, free of all trusts, to certain persons designated therein comprising about 30 in all. In the trust deed Mr. Davis reserved the right at any time during his life to revoke any or all of the trusts therein declared and to add to, annul, change, or modify in any respect whatsoever, any of the trusts or powers created or conferred.

The ninth clause of the will provides as follows: "I give, devise and bequeath all the remainder of the property, real and personal, of which I die possessed or over which I have any power of disposition, including any of the foregoing gifts which shall fail for any reason, but excepting the remainder in my real estate in said Newport after the decease of my said wife and the said Emma B. Andrews, to my said executors, or any duly appointed administrator of my estate, in trust nevertheless, to convert the whole of said property into cash as soon as reasonably possible, with power for this purpose to sell the same or any part or parts thereof at either private or public sale, and the net proceeds of such sale or sales to pay over to the said Rhode Island Hospital Trust Company to be held, managed and disposed of as a part of the principal of the estate and property held by it in trust for my life and to the lives of others in the same manner as though the proceeds of such sales had been deposited by me as a part of said trust estate and property; and the receipt of said Trust Company shall be a full discharge to my said executors or administrators relieving them from all further liability or accountability in respect thereof. And I devise to the said Rhode Island Hospital Trust Company after the deaths of my said wife and the said Emma B. Andrews the estate in said Newport hereinbefore given to them for their lives, but in trust nevertheless for said Trust Company to convert said estate into cash as soon as reasonably possible after it becomes entitled to the possession of said estates, hereby empowering said Trust Company in the discretion of its officers or committee having charge of trust estates and with the approval in writing of the said Thomas L. Manson and Herbert Parsons or the survivor so long as both or either of them is living, to sell said estates from time to time at either private or public sale, and to add the net proceeds of any such sale or sales to the principal of the trust estate and property then held by it under the trusts theretofore created by me, and to divide and distribute said net proceeds to the same persons and in the same proportions as they are entitled to the principal of my said trust estate under the terms of said trusts; and no purchaser from my said executors or administrators, or from said Trust Company, shall be under any obligation to inquire into the propriety or regularity of any such sale or sales or to see to the application of the purchase moneys, but all transfers and conveyances from my said executors and administrators, and from said Trust Company, shall give to the purchaser as good, valid and sufficient titles to said properties, real and personal, as I die possessed of, without other act by the purchasers than the payment of the purchase moneys."

Thomas L. Manson, named as executor in the will, acted as such up to the time of his death, and thereafter the Rhode Island Hospital Trust Company was duly appointed by the probate court as administrator de bonis non with will annexed to administer the estate, and has continued to so act down to the present time.

Later proceedings in equity (D. C. 255 F. 162) were commenced by Kate Atwood, a resident of Massachusetts and a half-sister of the testator, in her individual capacity and as executor of the estate of Gertrude Galloway, a sister of the testator, seeking to have the residuary clause of the will of Davis declared inoperative and void.

The action was commenced in the United States District Court for the District of Rhode Island. From a decree of the District Court dismissing the bill (264 F. 360), the plaintiff Atwood appealed. The order of the District Court was reversed, a majority of this court holding that the ninth clause of the will did not incorporate by reference any existing trust instrument; that, even when explained by parole evidence concerning the inter vivos trust, the ninth clause was to be construed as relating to trust provisions by which the testator reserved the power to change the objects of his bounty by oral directions which was obnoxious to the statute of wills of the state of Rhode Island and void; and, therefore, Davis died intestate as to the residuary property.

The final conclusion of the court was that the residue of the personal property of the estate of Theodore M. Davis, subject to proper proceedings in the probate court and subject to a contingent claim of one of the original beneficiaries, was held under a resulting trust for the plaintiffs, namely, Kate Atwood in her individual capacity and as executrix of the estate of Gertrude Galloway.

The case was remanded to the District Court and a final decree entered in accordance therewith April 28, 1922. This decree has never been modified, and no bill of review has ever been filed seeking its modification.

Immediately after this court had rendered its decision and before the decree was entered upon mandate, the trust instrument executed by the decedent August 14, 1911, the same date as the will, was offered for probate in the probate court of Rhode Island as a part of the will of Theodore M. Davis. Both the probate court and the superior court upon appeal denied its probate. The case was carried to the Rhode Island Supreme Court sitting as the Supreme Court of Probate for that state; the decisions of the lower courts were reversed and the probate court was directed to admit to probate the trust instrument. Merrill v. Boal, 47 R. I. 274, 132 A. 721, 45 A. L. R. 830. Pursuant to the direction of the Supreme Court a decree was entered May 24, 1926, covering said trust instrument, will, and codicil in the language following: "Said instrument is hereby admitted for probate as a part of the will of Theodore M. Davis and as comprising, with the will and codicil heretofore admitted to probate, the will of Theodore M. Davis; and said will and codicil heretofore admitted to probate and the instrument which is the subject matter of these proceedings are decreed to be the last will and testament of Theodore M. Davis."

On December 29, 1926, the Supreme Court of Rhode Island handed down another decision in the case of Merrill v. Atwood, 48 R. I. 72, 135 A. 402, which involved the construction, validity, and effect of the complete will as finally admitted to probate, in which it was held that the combined instruments made a valid testamentary disposition of the property mentioned in the ninth clause of the main will.

The complainant Atwood appeared in the cases pending in the Rhode Island courts; she opposed the probate of the trust instrument at each successive step until finally defeated in the state Supreme Court; and she was also heard in the so-called construction suit before the Supreme Court in the case of Merrill v. Atwood,...